How Much Are 1975 Dollars Today Worth?

Some years pass without making much of an impression, but 1975 was a big one. President Gerald Ford brought the Vietnam War to a close. VCRs were introduced, and Stephen Wozniak and Steve Jobs created the Apple 1 prototype. 

Jaws was number one in the box office, and One Flew Over the Cuckoo’s Nest won the Oscar for Best Picture. The Captain and Tenille’s Love Will Keep Us Together was named Song of the Year, and All in the Family was the top television program. That same year, Saturday Night Live premiered with George Carlin as its very first host.

In 1975, the US population was just under 216 million, and the median family income was $13,720. First-class stamps cost just $0.10 each. A quart of milk went for $0.46, and a loaf of bread was $0.33. 

So, what happened to the cash people stashed away in 1975? Did it retain its value, or has it lost significant purchasing power? In other words, how much are 1975 dollars worth today?

How Much Is a 1975 Dollar Worth Today?

If you had $1 in 1975, you could buy three pounds of strawberries, a pound of ground beef, or ten pounds of potatoes.

A dollar was enough to take home four dozen eggs, ten pounds of sugar, or three Morton’s TV Dinners. That’s not the case anymore, with food prices up 363.13 percent between 1975 and 2021. 

When other categories of goods and services are averaged in, inflation for that period is even higher – nearly 402 percent. In fact, a 1975 dollar is worth less than $0.20 today. 

How Has Inflation Increased Since 1975?

Inflation was a hot topic in 2021, and it is expected to be top of mind for policy-makers throughout 2022. Stimulus programs and economic policy intended to protect the most vulnerable Americans during the COVID-19 pandemic created the right conditions for higher-than-average inflation – 6.8 percent for the 12 months that ended November 2021. 

Changes are being made to curb this trend before it creates significant issues, but this isn’t the first time that inflation has spiked. In fact, today’s inflation rate is only startling because inflation rates have been quite low since the 2009 financial crisis. In 1975, a 6.8 percent inflation rate would have been welcome. 

From 1971 to 1980, inflation rates looked like this: 

• 1971 – 4.29 percent
• 1972 – 3.27 percent
• 1973 – 6.18 percent
• 1974 – 11.05 percent
• 1975 – 9.14 percent
• 1976 – 5.74 percent
• 1977 – 6.50 percent
• 1978 – 7.63 percent
• 1979 – 11.25 percent
• 1980 – 13.55 percent

Of course, inflation rates didn’t stay that high long-term. Most of the years that followed saw more moderate inflation, and there was one year (2009) when deflation of (0.36) percent occurred.

From 1975 to 2021, the average annual rate of inflation was 3.49 percent, which adds up to a total of 402 percent for the entire period. 

How Much Has Inflation Eroded Purchasing Power Since 1975?

Rising prices reduced the value of every dollar, eroding purchasing power year after year.

By the end of 2021, prices were approximately 5.17 times higher than their 1975 equivalents. To look at it another way, a dollar buys just 19.36 percent of what it could buy in 1975. 

Specific examples of inflation in action include: 

• What Is $1 In 1975 Worth Today? $5.02
• What Is $100 In 1975 Worth Today? $501.97
• What Is $1000 In 1975 Worth Today? $5,019.72
• What Is $1,000,000 In 1975 Worth Today? $5,019,718.95

That fact is more than an interesting bit of trivia. It has real-world consequences for your ability to build wealth over the course of your lifetime. 

Is Cash A Bad Investment? 

The stock market isn’t for everyone. Many people find that choosing investments and making trades don’t interest them. However, avoiding investments altogether in favor of keeping cash in savings accounts or similar banking products is unwise. 

Banks make money by taking in deposits, paying interest to account holders, lending out those funds, and charging interest to the borrowers. The difference between the interest charged to borrowers and interest paid to account holders is profit. That means traditional accounts don’t pay much interest at all. As of November 2021, the average interest rate paid on US savings accounts was just 0.06 percent. 

Even if inflation is relatively low, a 0.06 percent interest rate simply can’t keep up. In ten years, 0.06 percent interest on $1,000 is $6.02. Meanwhile, inflation continues to erode purchasing power.

If the ten-year period went from 2012 to 2022, that $1,000 in a standard savings account would be down to 82.06 percent of its 2012 purchasing power by 2022. Cash can’t keep up with inflation, which makes it a bad investment. 

What Is $100 Invested In 1975 Worth Today?

The markets generally keep up with inflation because higher prices at the store translate into higher revenues for businesses. Though investment in any individual company can go south, the market as a whole has historically increased in value over the long term – even after heavy losses and dramatic crashes.

Even those who aren’t interested in managing their own investments can reduce or eliminate the risk of losing purchasing power to inflation with invest-and-forget index funds like the Vanguard 500 Index Fund Admiral Shares (VFIAX). This exchange-traded fund (ETF) mirrors the S&P 500, successfully delivering returns that are basically in lockstep with the market. 

For example, in the past ten years, the Vanguard 400 Index Fund Admiral Shares ETF had returns of 16.51 percent as compared to the S&P 500’s 16.55 percent. That’s much closer to the total inflation of 21.06 percent during that same period. 

Those who elected to invest their 1975 cash instead of keeping it a low-interest bank account are in a much better financial position today. A 1975 investment of $100 could be worth $16,400 today if the investment vehicle matched the S&P 500’s average annual return of 10.9 percent. Cash kept in a standard savings account with an average one percent interest rate would be worth just $160 today. 

How To Calculate Today’s Value of Money After Inflation

Learn more about how inflation will affect your future buying power by calculating today’s value of money after inflation. There are a variety of free calculators available online that will help you better understand why investing your cash is a must for building long-term wealth. 

This is a popular one by Nerdwallet for example.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.